Binance halts withdrawals as suspected hack spurs crypto sell-off, vows to ‘cover all losses’

[NEW YORK] Binance, the world’s largest crypto exchange, suspended all deposits and withdrawals as it investigates a security incident that has resulted in billions of dollars in assets being frozen.

Digital tokens tumbled amid fears the suspected hack may become the biggest crypto heist ever. 

“We are working non-stop to resolve this issue. Binance will cover all losses,” the company said in a post on X.

“As a precaution, all deposits and withdrawals are temporarily suspended while our team conducts security checks, freezes funds, and works with law enforcement.”

Binance said some US$3 billion in assets are currently frozen but “this figure may continue to increase”.

Binance co-founder Changpeng Zhao said the exchange may have been hacked but he expects all user funds will be fully covered. Zhao, who goes by CZ, no longer runs the company but remains its largest shareholder.

Online forums were rife with loss estimates and theories of how the attack was designed, none of them confirmed.

Blockchain tracker Arkham has identified wallets associated with the suspected hacker holding about US$5.9 billion in digital assets, though the figure does not necessarily represent the amount stolen from Binance.

Bitcoin slumped, falling below US$77,000 to its lowest level since September, with other tokens also selling off. US stocks ended lower, with the Nasdaq 100 tech index dropping nearly 1.4 per cent.  

“The rumoured Binance hack is definitely driving down coin prices,” said Fredrick Collins, chief executive and co-founder of crypto data platform Velo Data.

“Binance is such a behemoth in crypto that any hit to confidence in them is a hit to confidence in the industry as a whole, especially as people have already been skittish over the increasing cyber capabilities of (artificial intelligence).”

For crypto faithful who had been basking in a two month-long price rebound amid the tightening embrace of institutional Wall Street, the incident is a potential setback.

Notorious episodes of theft and fraud among fallen crypto giants such as FTX and Mt Gox set the stage for protracted bear markets in the past, bruises the industry has worked to put behind it in US President Donald Trump’s promised new era of regulatory clarity for cryptocurrencies.

To date, the biggest publicly known crypto hack occurred at exchange Bybit in February 2025, in which attackers made off with almost US$1.5 billion of tokens. 

An emergency insurance and reserve fund from Binance called the Secure Asset Fund for Users (SAFU) was established in 2018 to serve a backstop for customers in “extreme situations”, according to the exchange.

The SAFU is generally maintained at around US$1 billion, but has fluctuated in the past in tandem with market movements, Binance said in 2024.

The two biggest stablecoin issuers said they took steps to freeze missing currency.

Paolo Ardoino, the chief executive officer of Tether, said in an X post that it froze more than US$1.5 billion of the stablecoin “related to a potential Binance exchange hack”.

Jeremy Allaire, who runs Circle Internet Group, said US$800 million of its coin had been frozen amid “reports of a potential exploit involving Binance”.

Sentiment was already fragile after a spate of crypto security incidents. In recent months, hundreds of millions of dollars were drained from Bitget, while tampering tied to Ledger devices also led to millions of dollars in losses. 

“Attackers are operating at unprecedented speed and scale” but “the tools to track and trace operate at that speed too”, said Ari Redbord, global head of policy at blockchain intelligence firm TRM Labs.

“Stablecoin issuers freeze within hours. Investigators follow funds across chains in real time.”

Traders had already been bracing for greater volatility in the crypto market this week, with US$11 billion in options set to expire on Friday (Oct 30).

This comes days ahead of the US midterm elections taking place next week, when Democrats could potentially retake one or both chambers of Congress and open the door to greater regulatory scrutiny for the industry.   

Exchange thefts and malfeasance have been an ever-present backdrop of crypto’s almost two-decade ascent, the most famous of which was the collapse of Sam Bankman-Fried’s FTX in November 2022.

In what remains perhaps the most notorious hacking incident, Japan-based Bitcoin exchange Mt Gox was struck in 2011.

Over time, the hackers made off with tokens worth billions of dollars based on the current market price. Mt Gox eventually went bankrupt.

“It’s a huge damage to crypto because of the consistent successful hacks in the space,” said Tian Zeng, chief executive officer of crypto hedge fund Third Eye.

“The fact that exploits keep happening makes it dangerous in the age of newest AI models being released every two weeks.”

The Binance incident came on the same day event-contract venue Polymarket halted trading on its international exchange for an hour after it said that a third-party software provider was compromised.

More than 700 Polymarket users were drained of US$2.7 million in funds, said blockchain analytics platform Bubblemaps, in a post on X. A spokesman declined to comment on the numbers.

Recent security incidents have not been confined to crypto firms.

South Korea’s Daishin Securities disclosed a data leak affecting about 38,000 customers this week, and Mirae Asset Global Investments reported a hacking incident, Yonhap reported.

In Japan, hackers on Tuesday threatened to release data of traders using a GMO Internet Group cloud service for foreign exchange trading. BLOOMBERG